Saturday, December 02, 2006
Bad News Lots of Movement
Its days like Friday which confirm what I always knew about options trading.
Place your position, put on your stop loss, then don't look at the market again until the end of the month. What happens during each trading day is irrelevant to us and despite what any technical analysis experts say there is no rhyme nor reason as to why markets act as they do.
Anyway, the normally bullish month of December got off to a rough start on Friday. The Dow ended the session with a loss of 27.80 points to close at 12,194.13. The SPX declined 3.92 points to 1,396.71.
The ISM (Institute of Supply) Index was the major cause for concern Friday, as it fell into contraction territory for the first since 2003. The index fell to 49.5 percent in November from 51.2 percent in October (anything below 50 is considered contraction). Expectations were for a reading of 52.2 percent so no wonder the figure was poorly received.
At one point during the session, the Dow was down triple digits, but hopes of a Fed rate cut helped buyers to come back into the fray with a vengeance in the last hour. You can tell Traders are trying balance the risks of a hard landing for the economy and inflation pressures. Though a rate cut is a positive for stocks, a hard landing would create problems for corporate America.
Anyway our play is still, for now, nicely in green. I would still like to see some movement upwards this week as with only 9 trading days to go our risk now in this play is to the downside (unless they catch Bin Laden tomorrow!!).
Lets see what the week will bring.
Until next time.
Place your position, put on your stop loss, then don't look at the market again until the end of the month. What happens during each trading day is irrelevant to us and despite what any technical analysis experts say there is no rhyme nor reason as to why markets act as they do.
Anyway, the normally bullish month of December got off to a rough start on Friday. The Dow ended the session with a loss of 27.80 points to close at 12,194.13. The SPX declined 3.92 points to 1,396.71.
The ISM (Institute of Supply) Index was the major cause for concern Friday, as it fell into contraction territory for the first since 2003. The index fell to 49.5 percent in November from 51.2 percent in October (anything below 50 is considered contraction). Expectations were for a reading of 52.2 percent so no wonder the figure was poorly received.
At one point during the session, the Dow was down triple digits, but hopes of a Fed rate cut helped buyers to come back into the fray with a vengeance in the last hour. You can tell Traders are trying balance the risks of a hard landing for the economy and inflation pressures. Though a rate cut is a positive for stocks, a hard landing would create problems for corporate America.
Anyway our play is still, for now, nicely in green. I would still like to see some movement upwards this week as with only 9 trading days to go our risk now in this play is to the downside (unless they catch Bin Laden tomorrow!!).
Lets see what the week will bring.
Until next time.
# posted by Paul @ 4:59 PM 
